NY Mets get soaked by bankrupt Spongetech
Baseball team is owed $2.6 million by the company whose executives have been charged with fraud and obstruction of justice.
August 19, 2010 3:06 PM
By Aaron Elstein
crainsnewyork.com
As another New York Mets season slides down the drain, here's more bad news for the team: It is owed $2.6 million by a sponge-making company that has collapsed into bankruptcy and whose management has been charged with fraud.
The company is Spongetech Delivery Systems Inc., which once was an advertiser at CitiField, Madison Square Garden, Yankee Stadium and other such places. In May, former Chief Executive Michael Metter and Chief Operating Officer Steven Moskowitz were charged with faking 99% of the New York company's sales, obstructing justice, and making millions from selling shares at inflated prices, evidently using a portion of the proceeds to buy advertising at ballparks, football fields, and hockey arenas across the country. The two executives have pleaded not guilty.
For the Mets, $2.6 million isn't a great deal of money, considering they generated $268 million in revenue last year, according to Forbes. Still, it is a bit more than the combined salaries of outfielder Angel Pagan and pitcher Hisanori Takahashi, according to ESPN data.
Spongetech also owes $175,000 to cable channel SportsNet New York, which telecasts Mets games, according to a list of unsecured creditors filed in federal bankruptcy court Wednesday.
Spongetech owes Madison Square Garden $512,000 and $150,000 to the New York Islanders. The New York Yankees are owed just $20,000, but the Boston Red Sox are owed $78,000. The fallen sponge company also owes $323,000 to WFAN, the sports-talk radio station.
For those keeping score, the Tampa Bay Buccaneers are owed $2.7 million by Spongetech, more than any other team.
Many teams sued Spongetech for nonpayment before management was arrested. It seems highly unlikely that any of the teams will collect their money.
“Spongetech currently has no available cash,” wrote the trustee for its bankruptcy estate in letter to the court last month.
The trustee said Spongetech is owed $1.2 million by another company that is also in bankruptcy and apparently has $1 million worth of sponges in inventory left to sell. The company also holds a promissory note from a “former insider” with a face amount of $6 million. Meanwhile, Spongetech's former landlord asserts it is owed about $150,000 in unpaid rent.
crainsnewyork.com |
